Introduction:

In a significant ruling carrying major implications for prosecutions under the Prevention of Money Laundering Act, 2002 (PMLA), the Madras High Court in Rahul Surana v. The Assistant Director, Enforcement Directorate addressed whether supplementary prosecution complaints filed under Section 44 of the PMLA require the Special Court to take fresh cognisance each time additional materials or new accused persons are brought on record, with the bench of Justice S.M. Subramaniam and Justice Mohammed Shaffiq analysing the statutory scheme in detail and reconciling it with the 2022 and 2024 amendments to the money-laundering regime. The case arose when the petitioner, Rahul Surana, who was later added as an accused through the second supplementary prosecution complaint filed on 6 November 2024, challenged a docket order of the Special Court, PMLA Cases, on the ground that the court had taken cognisance without granting him the pre-cognisance hearing allegedly mandated by the proviso to Section 223(1) of the Bharatiya Nagarik Suraksha Sanhita (BNSS), which replaced the Code of Criminal Procedure. The Enforcement Directorate (ED) had initially filed the main prosecution complaint on 9 September 2022 under Section 44(1)(b) of the Act in connection with alleged large-scale fraud of ₹1301 crores perpetrated by Surana Industries Limited, the lenders’ consortium being public sector banks whose funds were allegedly siphoned off using a web of shell entities, manipulated accounts, circular trading, fictitious invoices, and diversion of loan proceeds which were ultimately layered into movable and immovable properties considered to be “proceeds of crime” under Section 2(1)(u) of the PMLA. After the main complaint, cognisance was taken and the case was duly registered; subsequently, the ED filed the first supplementary complaint on 11 June 2024 and later the second supplementary complaint on 6 November 2024, the latter for the first time including the petitioner as an accused based on materials emerging from an SFIO investigation.

Arguments:

The petitioner argued before the High Court that the Special Court wrongly treated the second supplementary complaint as a new complaint requiring independent cognisance, and since he was now being arrayed as an accused, the Court was bound to grant him a hearing under the proviso to Section 223(1) of the BNSS before taking such cognisance. It was contended that the procedure adopted violated natural justice, that the docket order incorrectly stated that “cognisance is taken,” and that the supplementary complaint lacked “fresh materials” as required by the Explanation to Section 44(ii) of PMLA since the SFIO complaint, according to him, merely rehashed existing information. He further argued that filing successive supplementary complaints without fresh cognisance renders the statutory hearing requirement under BNSS meaningless and that such failure prejudiced his right to defend himself at the threshold stage.

On the other hand, the Enforcement Directorate, represented by Special Public Prosecutor N. Ramesh, maintained that the statutory scheme of PMLA treats supplementary complaints as a continuation of the main prosecution complaint, not as independent proceedings; therefore, no “fresh cognisance” is required. The ED stressed that Section 44-PMLA, read with its Explanation, expressly states that once cognisance is taken of an offence through the main complaint, any subsequent complaint detailing further investigation or additional evidence is “deemed to be a part of the original complaint,” irrespective of whether the new materials implicate previously named or entirely new accused persons. Thus, according to the ED, the BNSS provisions invoked by the petitioner have no application because no pre-cognisance stage existed: cognisance had already been taken in 2022, and the supplementary complaint was merely placed on record to incorporate additional facts, further investigation, and new evidence emerging from the SFIO inquiry. It was also submitted that the docket order referencing “taking cognisance” was merely a linguistic error because the judge obviously meant “taken on file,” which is a common expression meaning the supplementary complaint has been attached to the existing record. The ED also highlighted that the SFIO materials constituted fresh evidence gathered during further investigation into complex financial layering, and therefore satisfied the statutory threshold for supplementary complaints.

Judgement:

After hearing both sides, the High Court undertook a detailed reading of Section 44 of PMLA, particularly the Explanation inserted to clarify that “prosecution complaint shall be deemed to include any subsequent complaint in respect of further investigation conducted to bring further evidence, oral or documentary, against any accused person involved in the offence, whether named in the original complaint or not.” According to the Court, this statutory deeming fiction leaves no room for doubt: a supplementary complaint is not a fresh complaint; it is intrinsically, by legal fiction, part of the main complaint for which cognisance has already been validly taken. The judges emphasised that the purpose of supplementary complaints is procedural efficiency and the avoidance of redundant formalities in complex money-laundering investigations that typically unfold in layers as further investigation progresses. They noted that money-laundering cases involve large data sets, forensic accounting, recovery of digital evidence, and multiple agencies such as SFIO and CBI acting simultaneously; therefore, requiring fresh cognisance each time additional materials surface would defeat the very purpose of a continuing investigation authorised by the Act. On the petitioner’s argument regarding the absence of a pre-cognisance hearing, the bench held that Section 223(1) BNSS becomes relevant only when cognisance is being taken for the first time. Since the Special Court had already taken cognisance in 2022, there was no occasion to apply the proviso. Further, the Court clarified that a pre-cognisance hearing under BNSS is not a mini-trial or an adversarial proceeding but a limited exercise enabling the court to satisfy itself that the complaint fulfills procedural and jurisdictional requirements; it cannot become a tool for accused persons to delay or obstruct proceedings at a stage where the Court is merely incorporating supplementary information into an already cognised matter. In dealing with the petitioner’s claim that the SFIO materials were not “fresh evidence,” the Court reviewed the documents and concluded that the SFIO report constituted substantive new material gathered during further investigation, going far beyond a mere re-evaluation of existing data. The Court also dismissed the argument based on the docket order containing the phrase “cognisance is taken,” holding that such wording is a curable clerical error that does not vitiate proceedings because the substance of the action was merely to take the supplementary complaint on file. Treating such clerical errors as fatal, the Court warned, would lead to unnecessary litigation and hamper the efficiency of judicial processes. Ultimately, the High Court concluded that the Special Court acted fully within jurisdiction, that the petitioner’s objections were misconceived, and that entertaining the plea would undermine the purpose of supplementary complaints in complex financial-crime prosecutions. It held that the petition was devoid of merit, affirmed that cognisance cannot be taken multiple times for the same offence, and dismissed the challenge, reinforcing the principle that all supplementary prosecution complaints under PMLA flow from the main complaint and are inherently part of it.